AS I SEE IT
The utilization of a specific pass- through product will likely have little effect on facility fees during the period it has pass-through status because the reduction taken each year is spread over all services for which Medicare pays under the OPPS and the ASC payment system rather than any single proce- dure or group of services. In fact, the actual use of a new pass-through prod- uct in 2015 will likely not be reflected in the size of the allocation, or the small adjustments to fees to create it, for 2016, because CMS will not have much data on 2015 utilization when it makes its 2016 estimates. When a pass- through product is bundled following expiration of its pass-through status, the associated Ambulatory Payment Classi- fication (APC) reimbursement amount increases in relatively direct correlation to the product’s utilization during its pass-through period; therefore, facility fees increase as a result of the product’s use during its pass-through status. The pass-through payments have
no effect on physicians’ fees, now or in the future. These payment rates are determined on a separate basis under Medicare’s Physician Fee Schedule, without reference to payments made to HOPDs or ASCs. Payments for a pass-through product
also have no material effect on overall spending in the US health care system. The pass-through payments are set up to be budget neutral. The bottom line is that Congress has set up Medicare’s two payment systems for facilities in a man- ner that will not materially affect the overall growth in Medicare outlays or in US health care spending.
Although the cost of a pass-through product might seem large relative to the facility fee for the procedure in which it is used, the size of the overall pass-through pool is small in the grand scheme of things. Medicare now pays out more than $500 billion a year, and payments to any one specialty or set of procedures represents a fraction of
Transitional pass-through payments can help an ASC give its Medicare patients access to novel therapies without increasing the ASC’s costs or overall spending in the US health care system.”
—Dr. Thomas A. Gustafson, Arnold & Porter LLP
that total, with pass-through payments accounting for an even smaller portion. Indeed, despite intense budget pres- sures, Congress has not rolled back the transitional pass-through provision or other new-technology payment mech- anisms. The most recent major Medi- care bill, which repealed the sustainable growth rate (SGR) formula for physician payment, left these provisions intact, a testament to Congress’s commitment to facilitating access to new technologies for the benefit of Medicare patients.
How It Works Let’s look at one recent example. In 2014, the Food and Drug Administration approved a proprietary combination of phenylephrine and ketorolac as the first product for intracameral delivery during cataract surgery to maintain pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative pain. CMS determined that this product was eligible for pass-through payments starting in January 2015 and assigned it a new Health Care Common Procedure Coding System (HCPCS) code, C9447 (Injection, phenylephrine and ketorolac, 4 ml vial). Through the end of September 2015, Medicare pays for this product at its WAC+6 percent rate, or $492.90 per vial. Beginning in the fourth quarter of 2015, the payment rate will be ASP+6 percent and will change slightly from quarter to quarter as the product’s ASP varies. Patients are not liable for a co- payment when the product is used in the HOPD setting and, although a 20 percent co-payment applies in the ASC, a 2014 report from the Kaiser Family Foun- dation suggests that the large majority of Medicare Part B patients have some
form of supplemental insurance to cover co-payments. Pass-through status for this product is expected to expire on Decem- ber 31, 2017. At that time, the facility fee for cataract surgery will be increased to reflect the use of the product with the magnitude of the rise depending on the overall utilization of the product during the pass-through period.
Clearing up Billing Misconceptions Congress established the provision to foster innovation and to remove financial barriers to the utilization of important new products. Reimbursement in Medi- care Part B patients is straightforward with proper completion of the billing claim and the use of the pass-through product’s unique HCPCS code. Coverage under Medicare Advantage and com- mercial payers usually follows suit, but facilities are encouraged to contact those payers prior to use of pass-through products to confirm payment rates. Also, most companies marketing pass- through products have reimbursement professionals and/or reimbursement hotlines to answer questions that facil- ities might have regarding billing and reimbursement. Performing as it was designed, the transitional pass-through provision bene- fits Medicare patients and ASCs by facili- tating reimbursement for innovative tech- nology now and paving the way for its incorporation into routine use—and stan- dard Medicare reimbursement—later.
Dr. Thomas A. Gustafson, formerly deputy director of the Center for Medicare Management, is a senior policy adviser at Arnold & Porter LLP in Washington, DC. Write him at
Tom.Gustafson@
aporter.com.
ASC FOCUS SEPTEMBER 2015 9
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